New plan offered to cut cost of Medicare

WASHINGTON — With Congress and President Obama poised to enter yet another budget battle, the Center for American Progress released a new plan Wednesday that the organization says will stem the rising cost of health care without hurting seniors.

The plan would cut $385 billion from the federal budget over a decade through a series of proposals that target waste in the health care system and modernize Medicare. The proposals affect every constituent from medical suppliers to doctors and hospitals to patients.

The report urges the medical device industry to move away from pricing set by the government and toward competitive bidding for equipment such as hospital beds.


Instead of paying doctors and hospitals for specific services, they should be reimbursed in ways that do not give them an incentive to perform unnecessary procedures. Tort reform is essential in transforming the psychology of doctors.

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States, too, should be empowered to control their own health care costs — something Massachusetts and Oregon are already tackling. The center also seeks to change the structure of deductibles and copayments so patients have an out-of-pocket limit based on their income.

“We believe these proposals are a ceiling, not a floor, in the discussions around health care,” Neera Tanden, president of the Center for American Progress, a liberal public policy think tank, said at a breakfast with reporters. “These savings are not easy to achieve. They are not an opening bid. They are what we believe should be a last bid.”

Tanden and health specialists presented the proposals as an alternative to existing proposals that would privatize Medicare, turn the federal senior health insurance program into a voucher system, and raise the eligibility age to 67 shift the cost to seniors, and slash Medicaid and raise the cost of long-term care.

Tanden stressed that the proposal — and the dollar amount that it is supposed to save — were controversial among many liberal-leaning advocates of universal health care because the report seeks to transform entitlements that are often considered untouchable by many.


“I can attest that many of our friends think it’s too high,” Tanden said. “We believe this is serious entitlement reform.”

Tanden, who had served on Obama’s health overhaul team, and the heads of other liberal groups and union leaders met with the president on Tuesday on taxes and entitlements.

Dr. Ezekiel Emanuel, a senior fellow at the Center for American Progress and another former Obama health adviser who helped craft the health reform law, said the success of the Affordable Care Act will ultimately be judged on whether it also stems rapidly rising  costs.

“These are legacy issues for” Obama, Emanuel said. “The real question for its success or failure is, ‘Can it control health care costs over the long term?’ . . . This really is the big kahuna for his legacy going forward.”

Tracy Jan can be reached at Follow her on Twitter @GlobeTracyJan.